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In carefully choreographed moves, the ECB has agreed to continue providing emergency liquidity assistance to Greek banks, but adjusted the collateral needed, in effect taking the first steps towards a Greek bank bail-in.

At the same time, the Greek Central Bank announced the capital controls and bank holiday in force for over a week will continue until tomorrow night.

It is believed the ECB will increase the amount of collateral it needs to hold to sufficient levels so as to continue to allow around €88bn in emergency liquidity assistance.

This should give the politicians time to assess the situation during today’s lunchtime meeting of eurozone finance ministers in Brussels, as well as a meeting of the leaders of the 19 eurozone states that will follow.
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They expect to have fresh proposals from the Greek government on a new bailout package and to have what is expected to be a full and frank discussion with the prime minister and his new finance minister.

Contrary to previous reports, the Greek Central Bank had sufficient funds to keep ATMs operating yesterday. It said it would leave the amount people can withdraw at €60 a day.

The increased haircut on the bank collateral means the banks are likely to run out of cash quickly, increasing pressure on the government to reach agreement with its creditors.

A source said the ECB spent a considerable amount of time looking through figures and there had been no objections from the other eurozone countries to continuing to provide emergency liquidity assistance at the moment.

The country’s new finance minister, Euclid Tsakalotos, said after Sunday’s resounding no vote that the country is not considering printing a new currency. “I don’t think they are going to throw us out” of the eurozone, he said.

In the meantime, the already deeply depressed economy is grinding to a halt.

Antonis Zairis, vice-president of the Hellenic Retail and Business Association, which represents more than 700,000 members, said the real economy had been frozen for weeks. Suppliers were demanding cash on delivery of goods and transactions, while providers of raw materials and goods from abroad had also halted. “We need this to change over the next 15 days for it not to become a complete catastrophe with layoffs of a big number of people,” warned Prof Zairis.

He fears that the next move would be for banks to bail in depositors and shareholders — with the ECB’s decision making this a real prospect in the coming days.